Texas Senate Bill To Promote Free Market for Package Store Ownership

Legislation introduced in the Texas Senate would remove a decades-old anticompetitive and unconstitutional limit on package store ownership and promote a free and fair market in Texas.

State Sen. Brian Birdwell, R-Granbury, has introduced Senate Bill 645 that would remove the limit on package store ownership and the so-called “consanguinity loophole.”

Current Texas law limits the number of package store permits a person can own to five with two exceptions or loopholes:

  1. If the permits were owned before May 1, 1949.
  2. The “consanguinity” exception which allows a package store owner’s closest blood relative to obtain additional permits and then consolidate the permits under the owner’s permit.

“For generations, Texas law has unfairly granted some families the ability to own an unlimited number of package stores while restricting others to a maximum of five. This protectionist arrangement has enabled a handful of entrenched package store owners to dominate the market while restricting competition and, ultimately, choices for consumers,’’ said Dale Szyndrowski, vice president of the Distilled Spirits Council. “Texas laws should apply equally to all individuals, regardless of family lineage.’’

The provision was ruled unconstitutional by U.S. District Judge Robert Pitman in a March 2018 decision.  The court concluded that the consanguinity exception, is inconsistent with the Equal Protection Clause of the U.S. Constitution.

The consanguinity exception is “unconstitutional because it extends a benefit (the right to have more than five package stores permits) to some persons while withholding it from others without a rational basis,” Pittman wrote.

Szyndrowski said: “Removing this protectionist clause would go a long way to modernizing the Texas Alcoholic Beverage Code, which is littered with outdated provisions serving no purpose than to restrict competition and protect special interests.’’

“It’s time to establish a modern framework to promote a free and fair market in Texas to promote competition, innovation and economic growth.’’ Szyndrowski said.

The distilled spirits industry is a vital force in the Texas economy and supports more than 82,000 jobs and makes a $7.5 billion impact on the state’s gross domestic product.  

 

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